tv Fast Money Halftime Report CNBC November 1, 2013 12:00pm-1:01pm EDT
day of the month. it's off, on the strong i.s.m., so important to watch. >> only twice this year has the first trading day of the month been negative. april and may. and, of course, we got -- we started the year with a bang. we'll see what the afternoon brings us. for the time being, barely hanging onto the green line. >> exactly v a great weekend. >> you, too. let's head to post 9 and wapner, the boys and "the half." >> thank you so much. the berini bull case, he is live here with his call on where stocks are heading next. >>. >> coffee talk. off a big run this year, can starbucks power even higher or are shares already overcaffeinated? our traders are going to battle it out. we do begin with the great debate over where the market is and where it might go over the final stretch of 2013, and what a year it has been going into today, the dow is up 19%. the s&p nearly 24%. the nasdaq 30%. but it is those astounding gains
that have some big-time market watchers increasingly worried and calling the whole thing a bubble that could burst at any time. it is "halftime." so let's play the action. steve weiss, are we in a bubble or not, because that's been the talk of the week. >> no, we're not. does anything go up in a straight line? absolutely not. but the market still has plenty of juice that's going to drive it higher well into next year. the reason being, we're still below an average market multiples, looking to 2014. 23 times since 1950 -- so a third of the time -- the market's gone up more than 20%, and about 13 times it's gone up more than 30%. and we've had multiple years back-to-back of better than 20%. so i'm still very positive on the market. if you're negative on bonds at all, the market has only gone down one year, where bonds have gone down one year. that's 1969, very explainable. so if you have a negative bond bet, and i do, because 10 years
at historically low rate, you have to be bullish on equities. >> nathan? >> there's pockets in the equity markets, there's clearly pockets. look at what's going on in solar. look what's going on in the web 2.0, the names. >> the market in general. we'll get to the subsectors -- >> i tend to be more skeptical than a lot of you guys, to be very frank. >> right. not just you, okay? there's "usa today," the business section today, "is the fed overinflating or inflating a stock bubble?" that's the question on the street. >> my answer is yes. >> and calling the market overzealous. though there are people leading the conversation that the stock market is not healthy. >> look at margin debt all-time high, equity inflows coming in, hand over fist. to me, i think you have the real potential for a blowoff top sometime soon. when you look at the s&p targets for next year, you're seeing 1,900, 1,950, that sort of thing. we may get sooner than we think. look, when you think back to what happened in 2000, we went
parabolic in q1. we risk that potential to happen soon. >> why has the market gone up 20% in the last -- >> not because of earnings growth, simon. >> no (unintelligible) -- a bubble. if you look at the chart where the s&p has gone, with the $3.7 trillion debt you put on, it's gone straight up. it's like feeding a dog trying to make -- >> what happened this week? we got the fed meeting, and people think it's a little -- [ overlapping speakers. ? [ -- >> the biggest mistake is being out of the market. you have the big hangover. you don't think the markets will sell off, 20%, 25% next month, next year either. you're foolish. you have to be long this market, but ready to pull -- as soon as -- >> it's the only game in town still. what are you going to do, sit and catch? >> isn't that the fact beyond all facts, that it still is the only game in town? >> boy, landon real estate, it was a game in that town. up 10% in september. >> you want to go bubble -- you want to go bubble spotting. they're out there.
>> you're talking a small town, you're talking london. i'm talking the world. >> ask yourself this question, pete. is the market overloved or underloved? that's one key question you need ask yourself. there still seems to be a fair amount of skepticism over this rally rather than euphoria, and debate the prices of stocks versus the value of the market, and you can make your case. >> i would say we're overloved and that is based upon what you are pointing out. you're right. there is no other place to put your money right now, where you're actually going to get that. you're also seeing the chase for performance right now, scott. that's something else that we've seen all of the folks who have missed it for nine months, whether it's in the solar stocks, transportation stocks, it really doesn't matter. >> -- overloved? people still hate this rally. >> they hate this rally, but they're participating, putting money into this rally, and a lot of the people, i think, are getting in very late. that's why i think when you look at the very smart investors right now, it's something that we talked about just the other day, on wednesday. you are seeing big money managers taking money off the table, but keeping themselves
involved in the market through the use of options, whether it's the eem or it's in the spiders, or in individual names, scott. when you look and see where is the paper right now, they're going out into january options. now, why would they do that? because they want to have a position going into the end of the year, because they think there might be a rally, but they think it's a bit frothy and bubbly, and they want not having the risk going into it. >> -- correct, as any stock, as any financial instrument, even real estate, 5%, 8%, at any point in time. but you can't play for that. remember, people would say, i'm not going into the market because of another terrorist attack. you're still waiting. >> laszlo berini just sat down next to us, the master trader. we're thrilled to have you with us. "the master trader" is the title of your book. settle for us here and now. you yourself have heard from a lot of people this week, as we have, on where they think the markets are right now. are we in a bubble or not in.
>> no. no, one of the things we do is we keep track of what people say, we keep track of newspaper headlines, we keep track of magazines -- >> like this one today, "is the fed inflating the stock bubble?" ? >> we can go back to '09 and show you a whole series of these things. some of these people have been negative for four years. the anecdotal data, what we call it, says we're hearing the same arguments over and over again, and i urge people to look at it as a moving not a series of photographs, because we're seeing it over and over again. when we see the market hit a new high, on c-7 of the financial section, that tells me we're still out in the market. >> you would subscribe to the notion that there's still a fair amount of skepticism that this is for as great as it has been, and has been this year, it's still underloved. >> that is a big surprise. that is where i've been really caught off guard.
i thought at some point people would return. they haven't. we still don't have a magazine, a bull on the cover. you know, the market hits a new high, it's the back pages. "the new york times" carries wire stories, they don't even assign a reporter on a day-to-day basis. >> let's open up the floor here, and continue the debate we've been what ihaving. >> laszlo, in terms of sentiment, what about retail household, the average holdings of stocks versus bonds? isn't that still out of balance in favor of bonds, and do you see it going towards stocks? >> still, you know, i think the public has not really bought into this market. i think we've underestimated the potential. a lot of it is because we haven't been banging the table with the good news. and so, i think that is a potential. but being a potential is not the same as -- >> laszlo, isn't that the opponent? there's not a whole heck of a lot of good news now. when you think about where the stock market is, where the global markets are, and how europe has played catch-up, you haven't seen a whole heck of a
lot of catch-up in emerging markets, but we don't see a lot of good news in the markets. when you think about why we're here -- >> where's the bad news? >> the bad news, there's no growth. you know? no earnings growth right now. it's not supporting -- >> there has been earnings growth. >> really? >> we've exceeded expectations, admittedly lowered expectations every quarter for the last 11, 12 quarters. and the best news of all -- >> dude, i asked the master. i asked the master here. i want to hear what the master -- >> i think the most important thing to ask you, laszlo, is this. okay, so the transportations have been on fire. there have been different pockets of the market that ripped to the upside. what brings us to the next level? what puts us up there towards 1,850 or 1,900 on the s&p from this level on? >> individual names. because while the market may not have certain characteristics, individual stocks do. when i see a google come out with good numbers and go up $100, and i see chipotle go up $70 a day.
>> but, laszlo, those weren't fantastic numbers. both of the stocks -- >> the revenues. the revenues is what really -- >> i understand. these are cult favorites right now. there's so much money crowding in such a narrow group, in my opinion. when you look at those outperformers, because i could give you ten names that disappointed and did not act well. so to me, you want to talk about bubbles, i think you have bubbles forming in individual names, whole foods is another one. starbucks, we'll talk about it later. there's real concentration -- >> oh, it's brewin' up. >> i think the individual stocks, i don't know which ones will be the next ones to carry forward, but again, we look at the market, and the things we've been talking about for four years are still intact. bearish -- >> you think we're going to 1,820 by when? >> well, it's in the book. [ laughter ] what's interesting, we looked at the historical stuff. the market has a three to six-month timeframe. so to forecast out a year,
you're timing where the market is. so we said 1,820 next three months, and more importantly, like i told you last time when we bought the s&p december 1 70s, we sold those, and now bought the january s&p 180s. >> that was you. i saw a lot of people buying those, i did. >> before we run out of time, more stock picks that you like. we say you're a master trader, that's what the title of the book is. priceline, cummins, and bp, prudho ebay, royalty trust. and we talk about a stock that's soared, a thousand bucks, tell me why you still like it. >> because we've done very well with it, and a lot of potential in that area, especially as it goes into europe, and you still have, and it has the potential of splitting, which could be -- could be a big boost. >> make the case for cummins. >> i think it oversold on the
earnings. the company's had a good run. it's a solid company. i think that it's, again, one of those picked on, missed a couple of numbers. we've had it for a long time, and we still like it. >> that's karma. because they put up some pretty bad numbers, laszlo, over the last number of quarters, the last couple of year, and it almost doubled. karma. >> we have to make this the last question. do you think too many people are focusing too heavily on the price of stocks rather than the value of the market as a whole? >> i think the one thing only missing is animal spirits. we still haven't gotten to that phase of the market. >> the euphoria. >> the euphoria, where all of a sudden the glass is half-full, but maybe three-quarters full. again, the story is continuing -- >> it's good to talk to you, as always. and the book, we have right
here, "the master trader," birinyi's secrets to the market. he understands them better than most. we'll have you back soon. let's get to the hot ipo, container store, surging in its first day of trading. hang on one second. shares doubling, minutes into the debut. let's send it to bob pisani and simon baker for the analysis. >> pricing it at $18. look at that, $36. opened at $35, trading at $36. we're talking about a doubling. and here, look at the volume. 12 million shares. they offered 12.5. so essentially, we've turned over the entire supply of stock here today. and, of course, i was with the ceo, mr. tendell, all throughout the morning, ecstatic, 100 employees around here, and, of course, ecstatic. the insiders own it at a average price of $4.93. $36 to $4.93. of course, they'll be happy. simon, the important thing here, the big question, we've got a
$2 billion market cap roughly. >> yeah. >> they sold a quarter of the company today. >> yeah. >> is that going to be big enough to attract institutional buyers? >> i think, when it all settles, with the market cap, trading 2 million, 3 million share as day, it won't have a lot of floats. it won't have a big appetite. let's talk about the valuation. the boys are talking about is this a company, a great company, a great story for this morning, but at the same time, it's selling containers, and it's up 100% on the ipo. so let's talk a little bit about valuation on it, right, because that's what we want to know, whether you want to own it right here. the company says it will do $200 million in ebitda next year. i think whole foods is a good comparison. it trades at 13 times. that puts the stock at 46. 20 bucks from here, i'd own it. the street's 160 times, time 13 time, puts it right at 36. i'd be owning the stock here? no, i wouldn't. >> you're buying for future growth. the ceo talked about 63 stores, now seven or eight, and in the s-1, he talks about 300
eventually. you look at companies like take five, restoration hardware, those guys have done the same idea, start small and keep building. isn't that what people are buying into? those stocks have done great in the last year. >> they've done great. restoration hardware is another one. noodles & company, i'd put that that category. but you have to look at the earnings. the other thing, the company's never made any money. it has $576 million in defic deficit -- deficit. and so, it's got some leg room. it has some hair on it. that's all i'm saying. >> all right, scott, back to you. a big day for this company. >> bob, thank you so much. simon, as well. coming up, shares of netflix gaining 250% so far this year, but is there any more room to run? my next guest thinks so, he upgraded netflix to a buy today. and shares of starbucks having a great year, but things are cooling off recently. is it post-pumpkin latte sadness? we have both sides of the debate. and we're on bubble watch. morgan stanley is here with a bubble warning on the auto
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would you take a look at the gains? holy cow! sunpower, solar city, seen monster rallies. i mean, throw it out there. fundamentals, guys, or bubble, pete? >> i think there are bubbles inside of that category you're looking at, but first solar is not one of those. when you look at them trading now, the fact they raised the earnings, scott, they're capable of industrial sized parks, and it's trading a 14, 15 p/e. if you look at the cash position, it's outstanding. they got almost no debt. they're doing everything right, and i think the fact that buffett has actually done some deals with these guys says a lot about who they are, what they are, what they're capable of doing. >> it's up 90%, but still only 60% of what it was in 2011. pete's point, a secular story, and it's got higher to go. >> dan nathan was worried about solar stocks off the top. at least, what -- how could you not be to some respect, 450% sunpower, solar city, 360%. those are insane gains.
>> laszlo just told us, no animal spirits in the markets. regardless of the balance sheet, the earnings potential, it looks like a cheap stock. it has no debt. the stock is -- has almost doubled this year, okay? i would call those animal spirits here, because earnings are declining. they earn $7 a share two years ago. they're expected to earn half that this year. so to me, there is price action that's bubbly. >> it's almost -- you can't refute the fact that there has been, it seemingly, animal spirits, steve, in some stocks -- >> elon musk play, right? >> beyond solar, right? >> yeah. yeah. >> with netflix, tesla. >> yeah, momentum. momentum is a class of investor. and they have as much rights to the market as value investors or regular growth investors. i think they suffer greater risks, so i'm not there. >> going back to h.q., and dominic chu has a "market flash." what are you watching now? >> how about the drop in facebook shares from the record highs that we saw earlier this month. coupled with earnings that we saw over the past week, that's
given argus research enough to upgrade the stock, upgrading to a buy from a prior hold, and slapped a $63 price target. they cite attractive valuation and facebook's demonstrated strong growth in ad revenues, especially, scott, mobile advertising. back over to you. >> yeah, dom, thank you so much. guys, just a couple of days owing, worried about the drop in teen usage, you know, the cfo mentions on the call, the stock drops, murph making the case why he jumped back in at 48 bucks. looks like a good buy, at least for one day's sake. what do you say? >> i sold most of mine, i said on the show the other day, before the earnings, playing momentum. and the training gods gave me a gift and sold the rest between 53 and 55 after they reported earnings within 10 minutes. i'd like to buy it back. i think the momentum's died for a little bit. i'm staying on the sidelines for now. >> the smart trade, though, scott, not just because i did it, but it made some sense to take the position off of the stock and be in the options, because of exactly the kind of price action we're seeing right
now. this stock was $57 in the post-market after earnings, and now it's trading near 50. i know it's up from 48. but the looks like to me that some of the momentum has started to slow down. >> all right. the other social name on the top of everyone's mind these days is twitter. it's expected to go public next week. what a lineup of guests we'll be bringing you on "the half." on tuesday, we'll talk exclusively to the ceo of the new york stock exchange, duncan neederhauer, and bob peck, the first writer to initiate it on twitter, with a buy rating, joining us on thursday, and a man who knows a thing or two about technology, roger mcnamee, so we'll talk to those three gentlemen as we look forward to the twitter ipo. one of this year's high flyers is getting another look. r.w. baird upgrading netflix to a buy and telling investors the mo-mo stock has room to run and corrally another 26% over the
next year. will power is the analyst who made that big call and joins us from dallas. welcome. >> good afternoon. thanks for having me. >> the stocks had a monster run to say the least. why upgrade it now? >> yeah, well, no question about it. look, in hindsight, if we covered the stock when it was $100, we would have loved to have bought it in. the reality is we picked the stock up a couple of amongs ago. we started with a neutral at the time. we now feel better about it. there are two key delivers here. a, greater conviction in its original content strategy, and the ability to drive sustainable differentiation long term with that. and then, b, what we think is a significant international growth opportunity. i can walk you through some of the numbers. we think there's a lot of room to run just on that basis. >> what about the bear case? you know, spending too much on content, can't add enough subscribers to fill that out. they don't own the actual properties that some people think they might. you know, some of the original content, for example, they have the right to license it here in
the united states for a significant period of time. they have the right to license it internationally for a significant period of time. but after that, they do not own it. >> well, yeah, and we'll see how that -- that strategy works over time. my suspicion is over time, they may actually start to own more of the content. there's no question, one of the big risks is the potential for higher content costs over time. we've seen that across the media industry, across the cable companies that i cover, as well. >> a certain risk, right? it's already happening. i think my point is, like, it's already happening. right? >> right. well, i guess the risk is, does it accelerate more? our sense is they've been able to incorporate that adequately, and keep in mind, netflix has more scale by far than anybody else in the streaming universe. and so, that provides an advantage, too, in some of the content discussions. >> your price target now is 420. >> that's right. well, you know, this one's always been tough from a valuation standpoint. we're using the sum of the parts approach. a multiple close in line with the internet leaders, for the
domestic business, a multiple for the international business. keep in mind from a sentiment standpoint, you look at the stock price and see that everybody loves the stock, but of the 30 analysts that cover, only four, five recommend the stock. as i've talked to investors on the buy side, including my early dialogue this morning on our upgrade, i still got a lot of pushback on this name many i'm not sure the sentiment is quite as positive as you might think. i'm sure that generating eyerolls but -- >> no, i hear you, but there are some who say reed hastings called the top on his own stock last week. >> no, that's right. yeah, well, that's been a favorite question. that's one of the things i've had to, you know, i guess think through here the past several weeks, as well. yeah, i think the background there is, he's acknowledging the fact, yeah, it's been a volatile stock, and we're making the bet he's not alluding to something out on the operating front. >> you better hope not. [ laughter ] we'll talk to you soon. >> sounds good. thanks for having me. >> will power down in big d. we'll talk to you soon. starbucks buy? all-time highs. or take profits now? you know it's more complicated
than that, so we have both sides of the starbucks debate coming up to help you make your decision. and with the growing fear of froth in the u.s., many investors are looking overseas for ideas. paul richards gave you a good you're row trade here on "the half" earlier this week, and today is back with more insight into that currency, and what else he is watching, as well. all of that is ahead on "the half." [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro.
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welcome back to the "halftime report." live from post 9. shares of starbucks are pulling back, but came within a hair of another all-time high in the morning. the stock is already up 50% in 2013 alone, so should you be a buyer or seller? we debate it. pete's the bull, dan's the bear. 1:30 on the clock. mr. najarian, make your case. >> here's the story with starbucks. we know the numbers that came out recently, but howard schultz was very smart in managing
everybody's expectations going forward. you look at the same-store sales internationally, up 7%. when you look at the americas, up 8%. they are hitting on all cylinders. there are three primary catalysts that drive it higher. one, the international growth. we've talked about it ad nauseam. you look at china, india, all of the different places they can go. two, fizzio, the carbonated drinks, and the other is tea vanna. they'll open up a thousand stores in the next five years in a $90 billion in a tea market they need a dent into. that will kick the earnings. it's going higher. >> the story is good. when you think about it, the stock is 50% on the year. obviously reflecting the good numbers when they reported. they did come inline for the quarter, for the fiscal third quarter. they did guide the street down. at this point, that's very prudent. it makes sense, especially when you consider a third of their sales come from oversea, a lot of the future growth comes from overseas, and let's be honest, the picture is a bit murky.
you have a stock trading at, you know, 25 times next year's earnings, expected to grow 20%. to me, i think there's not a lot of room for error. so if you want to put, you know, a one-times the growth multiple on the stock, the better entry would be at $70, not at $80. >> every time i hear the story about better entries, everybody said that in apple. i debated people on the desk at 440, there'll be a better entry. there hasn't been. >> you think this is a great spot to get in here? >> yes, there is so much room to the upside. they're taking the mcdonald's model and exploding it to the upside. >> who made the more compelling argument on starbucks, weiss? >> i think pete did. i'm getting do you know a prescription of zoloft. this guy is very depressing. [ laughter ] i mean, he hates everything. it's a great franchise, still great growth with phenomenal management. they've come through the decline in global markets in their stores. i think they've done better. >> you had too much coffee over there.
>> too much starbucks. >> going with pete, they're market carte blanche, been trying to say that, expetering with lunch in san francisco next quarter. >> a lot of experimenting going on over there. >> that's what you do. >> it's what you said earlier, here's the problem, why would you buy stock at a new high? that's the problem. all stocks are in all-new highs, and you have to be in the momentum names. >> tell us who you think won. tweet us at cnbcfastmoney. simon hobbs joins us from the new york stock exchange with a look at the action there. simon? >> scott, i really can't emphasize enough to you the importance of what is going on in europe at the moment after we got the poor inflation figure yesterday of 0.7%. as one bear put particular the euro zone recovery story is in tatters. you will see the markets are decisively lower on a day wall street is higher. so potentially decoupling, a look at the euro, fifth straight session.
what is the ecb going to do on thursday? are they going to cut rates? are they going to guidedecisive market? if we are headed to deflation, the danger is that economies are crawling along, people within them, will delay their purchases, and that will be potentially a horrendous thing for the ecb to have to grapple with, arguably with its hands tied behind its back. the irony is that you have had a phenomenal performance over the last month for greece, italian and spanish stocks, as a lot of hedge fund managers here go into europe, because that's where they perceive the value lying ahead. question, is this the inflection point that turns them back? there are a lot of stocks in negative territory. it's a broad-based decline. i will show you the banks, not least rbs, which is 81% owned by the u.k. government, is warning of a weak year and, more importantly, david cameron and his government have decided that they're not going to break the
bank up, they're going to put $61 billion of assets into a bad portion of the bank that they will sell off, scott, over the next three years. the importance of europe is everything at the moment. >> yeah. >> oh, you're here. hello. >> yeah, right here. a lot of focus on certainly what's happening there, a lot of focus on the individual stocks, and there is also, simon, a lot of focus on the value of the euro. our next guest gave you a trade the other day that looks awfully good right now. paul richards is back live with where that currency may go next. welcome back. >> hey, scott. >> it was a great call you made. did you call the top in the euro at 1.38? >> i think this year i probably called the top. the ecb going one way, the fed headed another. it might be heading to 1.33. >> selling it hit? >> i'm comfortable. they will cut rates in some shape or form, and talk about it next thursday, and the fed might be in the process of tapering before we talk about it. >> maybe the ecb was finished cutting rates for a while, now with the data simon was bringing us, in his words, the european
story is in tatters? >> not quite in tatters. they need a little longer. they're behind the u.s. in terms of recovery. >> let's switch gears and talk about the united states. a lot of talk, this week, as we mentioned from the outset about bubbles. do you think the u.s. stock market is in one right now? >> no, i don't. i think it's getting a little toppish on the year, being up 20-plus-percent. but it's a very well-manage pd recovery, as long as the fan is involved. we could be fine yet. but for now, i don't think this is frothy at all. >> what do you think about what's happening in the bond market right now, and what we got from the fed and the most recent statement, which some people took to be more hawkish than they expected, and then you take the chicago number yesterday, which i think spooked a little bit of -- spooked some people, as well. >> i think the market was too dovish going into wednesday. the fed just tweaked their message, that's all it was. now we're going to watch employment next friday. we have to keep a close eye on the 10-year, because they're clearly looking at the housing market. >> you think the best trade now
is just fade -- fade the euro? >> fade the euro, be long the u.s. dollar, wouldn't do much in bonds and in stocks, trimming a little bit into next week's payrolls. >> all right, paul richards from ubs. biotech is the s&p's top performer, but do the traders see a bubble there? we've got that trade on that sector in the very frothy warning signs. and the bubble hunt continues with autos. we'll talk to a star analyst who sees some serious froth forming in that space. that and much more from post 9 here at the new york stock exchange, just ahead. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle...
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you still own gilead. >> i have. i haven't shaved any. i bought more. look, the stocks are not in bubble territory. they're the fastest -- among the fastest-growing stocks in the market, and the valuation for amgen, 15 times next year. gilead, over two years, 10 times. so with more and more people getting health care coverage, including the six that signed on to obama care, you'll see an explosion here in the earnings. >> the problem is, guys, you just can't -- in some respect, you can't help yourself if you want to take money off the table in these names, regardless of how well they've done -- >> take them off the -- take off the binary risk is. >> they've become big pharma names, honestly. when you look at the valuations, and in many cases returning shareholders through repurchasing or doing it through dividends, these are mature companies now, revenue growth, earnings growth. it's phenomenal.
to your point, steve, when you look at where they're trading valuation-wise, celgene, amgen, they're not going down. >> it's a highly speculative -- >> i disagree. >> nothing speculative about the big-cap biotechs. what's speculative about a company growing at 50% with a pipeline that's mature, and growing? >> and an aging population. >> where's the bubble? >> see, this is why i raised the issue at the top of the show, maybe the most important question that people need to be thinking about right now, and i know we'll be thinking about it and talking about it in the days ahead. the price of the stocks versus the valuation of the market or the valuation of these individual stocks? it's easy to lock at a stock that's been up 100%, say oh, my god this, is a bubble, i have to get out of it. >> up 400%, you know, cross this off my list. >> that's my point. [ overlapping speakers ] >> -- what matters is valuation. >> -- better, the markets haven't got better, and the
numbers haven't been coming out -- >> but the valuations aren't stretched. [ overlapping speakers ] >> it's not netflix, not tesla, not facebook. these are names trading at multiple -- >> -- broadly, when the market sells off, which it will, all stocks will go down. these stocks are up -- >> brilliant statement. >> -- it will. that's what we're talking about, steve. >> here's valuation support here. this is not tesla. this is not netflix. there's valuation support here. period. >> you know what else it's not? it's not general motors. those shares are spiking today -- [ laughter ] -- following better-than-expected sales numbers, both ford and gm having great runs. starting to worry our next guest, adam jonas, morgan stanley's auto analyst. welcome to the "halftime" show. >> thank you. >> we're going to have a spirited debate about this call here, and where the auto stocks have gone. we saw the spike today on gm, on the back of the good numbers. why would you say the space is a little bubbilicious right here? >> we think we're seeing early signs of a bubble, due to what
we call the three cs -- credit, currency, and capacity. the credit side, we're seeing some yellow flags, banks are getting a little more aggressive in terms of credit availability. sub-prime is back to where it was pre-crisis in terms of the credit market. crisis is a low level. leasing going gang busters, approaching 30% of the market. these are warning signs. it can run further, that's why i said we're in the early stages of the bubble. we're seeing a warning. on the currency, the depreciation of the yen really, you know, it's like handing the japanese companies a $3,000 check to improve their product, and they will over the next 12 or 24 months. and capacity is probably the most -- the most underreported aspect here, as the industry's recovered, adding back over 100% of the capacity we took out in the downturn. and that's a -- that's a dicey ingredient for me. >> i noticed, though, you were careful to say yellow flags and not red flags. >> yeah. there's still -- i say yellow flags, because, well, first of
all, if these were red flags, they would be in free-fall, so there is a healthy debate. there is evidence to say that subprime lending could go on for much longer, and make the previous peak of subprime auto lending look small. used car values have been pretty stable the last few months. a lot of folks in the industry think that will continue. we don'tme mendon't. but those who do are writing juicy leases and think it could go to 35% of the market. like all bubbles, they start small before they pop. >> if you look at what's happening on the incentive front, an article today in the paper about increasing incentives on trucks. are we at a level -- is that another yellow flag for you? in terms of what's happening with pricing and margins? >> we wouldn't highlight the incentives on trucks and pickup trucks in particular as a warning sign. there seems to be gamesmanship going on between -- between the ram, the f-150, the silverado right now, month-to-month. gm pulled forward some sales, blowing out the '13 inventory.
ford's come back more aggressively discounting its f-150. so you'll see the kind of equilibrium being set. not concerned about that much as long as housing is still recovering. that's where the correlation is. >> can you -- >> yeah? >> can you give us quickly before you go, your opinion on tesla. >> yeah, tesla we rate overrate. it's a pretty fairly valued stock around 150, 160 bucks. we're overweight, because, actually, the average downsize to a stock we cover now is over 5%. so that actually screens pretty positively given the concerns for the broader group. >> you don't think this is overly frothy? >> well, we'll find out when they report earnings next week. we expect a good set of numbers, and certainly making the coolest car in the world doesn't hurt the stock. >> i know we're going to break, gm eight times next year's number, and tesla 100 times? i think you're misplacing the bubble. >> perhaps. auto stocks are usually cheaper in the market. tesla has a lot to prove, even
their own ceo would admit that. >> no, he certainly would. adam, thank you for joining us. >> certainly. are you fast enough to catch a falling knife? should you even try? if you're feeling brave, stick around. we have the sudden drops coming after the break. ♪ [ male announcer ] they are a glowing example of what it means to be the best. and at this special time of year, they shine even brighter. come to the winter event and get the mercedes-benz
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[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. i'm scott cohn in the cnbc
newsroom. we are watching details of an apparent shooting incident at los angeles international airport. l.a.x. has tweeted that there's an incident under way, that law enforcement is on the scene, and that more information is to follow. the faa is declining to comment. this is terminal 3, which includes virgin atlantic airways, and you can see a live picture of the scene that's now unfolding at l.a.x. and we have seen tweets going on for a while -- well, the last ten minutes or so, of people saying that we're being evacuated, there's a situation under way. obviously, we're trying to get a handle on exactly what this is. but we will have more as we get it, and we'll have more on the "halftime report" coming up after a break.
welcome back. we continue to follow this developing story out of lax, out in los angeles. scott cohn is back at headquarters with the breaking news there. scott, what can you tell us now? >> it's terminal three at lax. the airlines, leemgon air, front line, jetblue and spirit. we'll join cor average from knbc. >> -- spokesperson told us the shooting happened at a checkpoint, a tsa employee was injured and again we saw another person in a wheelchair also being treated but it's still unclear whether this is still
developing or whether it's all over. we've seen some law enforcement officers kind of running, ducking for cover. >> this is a friday, the day after halloween. there are a lot of people traveling perhaps more witnesses will be coming through, a busy morning here at lax as we get more information. as you just mentioned reports coming in that a tsa employee was injured during this shooting at lax. >> we spoke to carly white, a witness there, and she said it was a chaotic scene as people started running for their lives. at least terminal three is being evacuate evacuated on the left side live picture from news chopper four, a tent set up, appears officers going towards that, maybe treating some people here, let's
go back up to will kohlschreiber. you imagine if people are injured they might set up some triage area but that looks small for something like that. >> that looks like a police command post tent there. what we did see moments ago there is your triage area right there, the l.a. city fire department setting up, we are so used to seeing in major situations the tarps that go down on the ground, red for critical people in need of urgent medical care, green for being minor and usually a yellow one for something in between there. right now not seeing any patients on the tarps. we have seen at least two people being whisked down this way towards terminal two where the ambulances have lined up here, two people, one of them a tsa agent who was covered in blood, both of these people apparently
needing some sort of medical attention, the tsa agent was walking on his own, certainly a good sign but he was definitely wearing a large amount of blood on his uniform. he's into the back of one of the ambulances. >> officials are confirming the incident that happened at 9:30, the terminal three at lax at the departure level is what we're looking at here as the triage has been set up near terminal three by l.a. city fire, as will just mentioned. >> also we've seen from some of the live pictures all the road blocks and traffic that has been backing up. we're told that's century boulevard leading into lax is closed right now and you can see traffic there completely at a standstill. this is a live picture right now not from news chopper 4 but looking into some of the terminals and the areas specifically where we know the incident happened was terminal three near virgin america, the
shots being reported around 9:20 this morning. again, witnesses saying that a man with some kind of rifle was able to get past a security checkpoint. we're still not getting much information from officials as they are still dealing with it. we know the lapd responded, the l.a. fire is setting up triage anybody who may need assistance and you imagine with something like this the fbi will also get involved at some point if they're not already there on the ground assessing the situation. again still developing. hopefully this is all over. we don't know that yet. >> as you mentioned century boulevard has been shut down as veg investigators get to the scene. lapd tactical units ari s s arr. busy halloween, hasn't stopped since overnight, a lot of police incidents and the latest one at lax so we're waiting to get word on what's happening with the
travelers inside. >> we're getting information about some of the injuries perhaps. our assignment desk just getting this, a 45-year-old male going to ucla harbor medical center, 29-year-old male shot in the leg going to westwood. also a third victim with a sprained ankle. so if this is the extent of the injuries, hopefully that is good news. again, these are all preliminary reports that are coming in. we really don't know just how widespread this incident was. also hearing that one tsa agent possibly shot, that would match up with some of the live pict e pictures that we were seeing, being confirmed this happened in terminal three around 9:20 this morning. people reporting suddenly they heard shots fired. you can imagine michelle you go through the security checkpoints and all of the things that we have to go through the last thing you think would get through is a weapon. >> the irony is that i was at burbank last weekend and i
thought the same thing. you just think about security all the time with the questions and security measures that one must go through. how hard or difficult is it to actually just walk in with a weapon. lax officials want to let you know, too, though, because you can watch us here online, nbcla.com and lax is also putting all the information they have available on their twitter account but they are confirming this incident took place at 9:30. will, you have some more information for us? >> we just saw yet another person being put into the back of an ambulance there, it was a little difficult to see what kind of condition he was in, male patient there on the back of a stretcher put into rescue number 63 there, and that person obviously needing some medical attention. again, not seeing large numbers of people being brought out, put on these tarps, this triage,
these triage tarps here. that's some good news. we had reports just a moment ago that there were some sightings or at least some sort of video somewhere of large numbers of people being evacuated from the terminal. i have not seen that as of yet. when we first pulled up we saw a lot of people leaving terminal two but as far as terminal three where this incident reportedly occurred, not seeing large numbers of people leaving quite yet, so they may be sheltered in place. we don't know exactly where all the people are that should be inside that terminal right there but it does not appear at least right now that they're leaving unless they left already. >> just to let you folks know if you're just now joining us, we're told early reports that a man with a rifle was able to get past security at lax and open fire. we have witnessed here several people being treated, one man in
a wheelchair receiving treatment. we're getting information on some of the victims who have been sent to the hospital. this is a tactical alert by the west bureau and century boulevard is closed going into theent tran entrance, taking pl terminal three at lax. >> we're getting new reports that a person with a rifle, matching up with what we were hearing earlier used that rifle to shoot two people also matching up with what we heard about two different people taken to local hospitals, a 45-year-old man, we've heard reports was taken to ucla harbor general hospital, a 29-year-old man shot in the leg going to ucla medical center in westwood. we saw some of those pictures, one man earlier who looked like he had been shot in the leg in a wheelchair, then loaded into the back of an ambulance. will kohlschreiber want to bring you back in a second.
terminal three was sevacuated. have you seen at the other terminals flights coming in out out? >> no flights have taken off since we've been here. we have flights that need to land, so they come and they land. i see flights lined up actually out on the runway, and there are as i pull out -- >> you're watching live coverage from our nbc station in los angeles, knbc, of an incident still unfolding at los angeles international airport. i'm scott cohn in the cnbc newsroom. 9:30 west coast time, 12:30 eastern time there were reports of shots fired in terminal three at lax. that's the terminal that serves aleen allegiant, front tier, jetblue, virgin australia. what we know we believe what people have been injured. there are multiple reports about the suspect,